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Telecommunications Technology Transfers Contents CHAPTER 6 Telecommunications Technology Transfers Contents Page INTRODUCTION . 185 TELECOMMUNICATIONS IN THE MIDDLE EAST . 186 Telecommunications Systems . 186 Manpower Requirements . 190 Telecommunications Systems in the Middle East. ........: . 191 Perspectives of Recipient Countries and Firms . 211 Perspectives of Supplier Countries and Firms . 227 IMPLICATIONS FOR U.S. POLICY . 236 CONCLUSIONS . 237 APPENDIX 6A. – TELECOMMUNICATIONS PROJECT PROFILES IN SELECTED MIDDLE EASTERN COUNTRIES. 238 Saudi Arabian Project Descriptions . 238 Egyptian Project Descriptions . 240 Algerian Project Description . 242 Iranian Project Description . 242 Tables Table No. Page 51. Market Shares of Telecommunications Equipment Exports to Saudi Arabia From OECD Countries, 1971, 1975-80 . 194 52. Selected Telecommunications Contracts in Saudi Arabia . 194 53. Market Shares of Telecommunications Equipment Exports to Kuwait From OECD Countries, 1971,1975-80 . 198 54. Selected Telecommunications Contracts in Kuwait . 198 55. Market Shares of Telecommunications Equipment Exports From OECD Countries, 1971, 1975-80 . 202 56. Market Shares of Telecommunications Equipment Exports to Algeria From OECD Countries, 1971,1975-80 . 204 57. Market Shares of Telecommunications Equipment Exports to Iraq From OECD Countries, 1971, 1975-80 . 206 58. Selected Telecommunications Contracts in Iraq . 206 59. Market Shares of Telecommunications Equipment Exports to Iran From OECD Countries, 1971, 1975-80 . 208 60. Saudi Arabian Telecommunications Budgets As Compared to Total Budgets . 212 61. U.S. Competitive Position in Telecommunications Markets in the Middle East Between 1974 and 1982 . 233 Figures Page l0. Apparent Telecommunications Sector Breakdowns-Saudi Arabia, 1974-82 . 195 11. Apparent Market Share, Saudi Arabia, 1974-82 . 196 12. Apparent Sector Breakdowns-Kuwait, 1974-82 . 197 13. Apparent Market Share-Kuwait, 1974-82 . 200 CHAPTER 6 Telecommunications—. — Technology——. Transfers INTRODUCTION The countries of the Middle East realize the Middle Eastern countries, through their importance of modern, efficient telecommuni- PTT’s (post, telephone and telegraph) minis- cations systems to their future development tries have made major investments in telecom- and security. Middle Eastern leaders consid- munications infrastructure during the past er telecommunications as important a part of decade. In many cases, subscribers have only their infrastructure as roads and ports. This recently begun to feel the impact of telecom- is reflected in several of the 5-year plans and munications, yet the experience has generated budgets of Middle Eastern nations. Kuwait, a set of rising expectations and further de- in particular, wants to become a regional and mand for sophisticated equipment and serv- international financial center and has devel- ices among business and industry, govern- oped telecommunications capabilities neces- ment agencies, the military services, and sary to reach this goal. The centrality of tele- residential users. A number of factors have communications to development planning is contributed to this growing demand for tele- also reflected in cooperative regional efforts communications, among them the perceived such as Arabsat, a regional satellite commu- novelty of the improvements, prestige asso- nications system. ciated with telecommunications as a sign of modernity, and the utility of improved com- There is today great disparity in telecom- munications in achieving other development munications systems in the Middle East. goals. Some countries, like Kuwait and Saudi Arabia, have extremely modern, efficient systems; The rapid expansion of national and regional others like Egypt have comparatively dated telecommunications systems in the Middle equipment and systems which are much less East has made the region a major new mar- reliable. ket for equipment sales, operation and main- tenance, consulting services, and training. With the notable exception of Algeria (and This continuing transfer of technologies has in a few cases, Egypt), the countries under increased the capabilities of these countries to study have opted for the most advanced tele- expand their commercial and industrial bases; communications systems available-whether to improve domestic communications; and to microwave transmission networks, satellite explore possibilities for regional and interna- communications, or automatic electronic tional cooperation. On the other hand, con- switching. Kuwait and Saudi Arabia in par- tinuing dependence on foreign suppliers, and ticular have used their financial resources to the use and control of the systems, are some- purchase state-of-the-art technology. This has times controversial issues associated with allowed them to “leapfrog” conventional tech- these technology transfers. nology, becoming testbeds for some technol- ogy so new that it is not installed anywhere This chapter first examines the present sta- else in the world. Iran and Iraq found some tus of the telecommunications systems in each of the most sophisticated systems as best of the six study countries and in the region. suited to their needs. Algeria, in contrast, Perspectives of recipient and supplier coun- opted for more conventional technologies in tries and firms are then discussed. U.S. sup- order to lessen dependence on foreign exper- pliers have won sales of all types of telecom- tise and to promote indigenous equipment munications equipment and services in manufacture. countries such as Saudi Arabia and prerevo- 185 186 ● Technology Transfer to the Middle East ——.-—————— —— lutionary Iran, but overall, U.S. firms have not In assessing competition among suppliers and been a dominant force in telecommunications implications for U.S. policy, special attention trade in the region. In the world telecommu- is paid to the role of supplier government fi- nication market, U.S. firms have lost ground mincing in competition for sales of telecommu- to Japanese suppliers during the past decade. nication technology. TELECOMMUNICATIONS IN THE MIDDLE EAST TELECOMMUNICATIONS mechanically or electronically. Electromechan- SYSTEMS ical switching uses analog technology, wherein mechanical (dialing) and voice signals are Telecommunications systems generally in- transformed into a continuous signal of vary- clude: 1) telephone and telex equipment, 2) ing frequency and used to activate the transmission equipment, 3) mobile radio, 4) switches. Electronic switching uses electronic video and radio broadcasting equipment, and devices to connect circuits and usually in- 5) data communications equipment. During volves computer-controlled (software) circuit- the past decade, telephone and telex have been ry. It can operate using analog or digital tech- the major imports of the Middle East, mak- nology (see box A). ing up well over 50 percent of total imports Digital technology converts dialing and of telecommunications equipment and services for most countries. Transmission equipment voice signals into discrete electrical pulses that form computer-understandable streams of in- imports have been the second largest, valued formation. Because it uses the power of a com- at 20 percent of total telecommunications im- puter, digital switching technology can offer ports in some cases. The following section additional subscriber services such as abbre- briefly explains the application of the major viated dialing, call transfer, conferencing, telecommunications technologies in each of speed calling, call cost readouts, and reliable these categories. billing. Technically, digital technology is an Telephone and Telex Equipment improvement over analog equipment because it results in less deterioration of the trans- A standard telephone set consists of an ap- mitted signal, higher speed, and simultaneous paratus that includes a telephone transmitter, transmission of multiple calls. At the same receiver, and switchhook. Other types of tele- time, because digital technology is more so- phone equipment used onsite by a subscriber phisticated, use by local personnel in develop- are coin telephones, answering machines, in- ing countries may be more difficult. Indeed, tercoms, call restrictor devices, and station software engineers for digital systems are in accounting systems. A telex is a direct-dial short supply worldwide, not just in develop- telegraph service wherein subscribers can com- ing countries.1 municate directly through circuits of the pub- Almost all of the world’s telephone plants lic telegraph network. Teleprinters (instru- evolved using analog transmission; most of ments with a typewriter keyboard and printer) them will remain so for years to come because send and receive messages through the of the billions of dollars invested. However, system. it is probable that if telecommunications com- Both telephone and telex use switching panies were to start anew, telecommunications mechanisms to interconnect the circuits of channels would be almost entirely digital, with the equipment. Manual switching requires a the possible exception of the local “loops” be- switchboard staffed by an operator, while automatic switching can be performed electro- ‘Information provided by Continental Page, December 1983 Ch. 6—Telecommunications Technology Transfers ● 187 Box A.—Analog v. Digital Transmission There are two basic ways in which information of any type can be transmitted over telecom- munication media: analog or digital. Analog transmission entails transmittal of a continuous signal in a continuous range of fre-
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